The nation’s largest private shipbuilder tumbled 16 percent
to close at HK$1.17, the lowest level since it was listed in
November 2010. The stock has fallen 45 percent this year,
compared with a 6.2 percent rise in the Hang Seng Index.

The SEC accused Hong Kong-based Well Advantage Ltd., solely
owned by Zhang, of trading illegally before an announcement by
Cnooc Ltd. (883) that it would buy Nexen Inc. (NXY) for $15.1 billion.
Zhang, who is also chairman and founder of Hong Kong-listed real
estate developer Glorious Property Holdings Ltd. (845), wasn’t
directly charged in the complaint by the SEC, which also
obtained a court order freezing assets of traders it said were
involved in the illegal transactions.

“Given news that the SEC has ordered a freeze on accounts
allegedly related to Rongsheng Chairman Zhang Zhi Rong, we
believe our recent upgrade to hold for Rongsheng, based on
Rongsheng hitting crisis level valuations half that of peers,
now appears to have been too early,” Vincent Fernando, an
analyst at Religare Capital Markets, wrote in a note to clients
today. He cut the rating on the stock to sell from hold.

Daily Operations

The SEC complaint won’t affect Rongsheng Heavy’s business
and operations, the shipbuilder said in a filing today to the
Hong Kong stock exchange.

It also said Zhang doesn’t have any executive role in the
company, and day-to-day business activities and operation of the
group is carried out by the management team led by Chief
Executive Officer Chen Qiang.

Zhang was listed as China’s 38th richest person with a
fortune of $2.9 billion in the 2010 Hurun Report, which tracks
the country’s affluent.

Rongsheng Heavy also said today it expects first-half
profit to decline significantly over last year’s because of
falling orders and prices for ships. The company hasn’t
announced any new orders in 2012.